Thank you for standing by. My name is Kathleen, and I will be your conference operator today. At this time, I would like to welcome everyone to the Enhabit Inc. Third Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Bob Okunski, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining our call today. With me on the call this morning is Barb Jacobsmeyer, President and Chief Executive Officer; and Ryan Solomon, Chief Financial Officer. Before we begin, I want to let you know that our third quarter earnings release and supplemental information are available on our website at investors.ehab.com. Additionally, we have filed a related 8-K with the SEC, and that is also available in the same location. On Page 2 of the supplemental information, you will find the safe harbor statements, which are also set forth in the last page of our earnings release. During the call, we will make forward-looking statements, which are subject to various risks and uncertainties, many of which are beyond our control. Certain risks and uncertainties that could cause actual results to differ materially from our projections, estimates and expectations are discussed in our SEC filings, including our annual report on Form 10-K, which is available on our website. We encourage you to read these documents. You are also cautioned not to place undue reliance on the estimates, projections, guidance and other forward-looking information presented, which are based on current estimates of future events and speak only as of today. We do not undertake a duty to update these forward-looking statements. Our supplemental information and discussion on this call will include certain non-GAAP financial measures. For such measures, reconciliation to the most directly comparable GAAP measure is available at the end of the supplemental information as well as our earnings release. With that, I'd like to turn the call over to Barb. Barb?

Good morning, and thanks for joining us. Let me start by recognizing the exceptional Enhabit team. We're proud to share that Enhabit has been named as one of Fortune's Best Places to Work in health care. This recognition is a powerful testament to our commitment to a culture of excellence, strong leadership and an outstanding employee experience. It's that same team that has delivered another quarter of strong performance for our patients, partners and shareholders. I will address the 2026 CMS home health rule before Q&A. But first, Ryan and I will review the quarter results. Home health total admissions were up 3.6% year-over-year, with census increasing 3.7%. Normalized for closed branches, our admission growth was 4.3% year-over-year. Fee-for-service Medicare census continues to stabilize with census down 1.4% year-over-year versus the 14.1% year-over-year decline experienced in quarter 3 2024. Our non-Medicare admissions were up 10.4% and an appropriately managed payer mix resulted in a 2.8% increase in non-Medicare revenue per visit year-over-year. As mentioned on our last earnings call, we experienced disruption at the end of the second quarter, early third quarter in both admissions and census from the impact of renegotiations with a national payer that ultimately resulted in achieving a low double-digit increase in our per visit rate effective August 15, 2025. By late September, we have recovered our census with this payer and recent admissions are now at 120% of our weekly average. Our total patient census grew sequentially each month of the third quarter, and that sequential growth persisted into October. Our scale drives meaningful access to payer members and that access, coupled with our high-quality outcomes, continues to position us well for progress within our payer strategy. This was evidenced by another renegotiated national payer contract during the third quarter. This was the renegotiation of…

Thank you, Barb. Continued strong execution in the quarter on our broader strategy delivered strong consolidated financial performance with both top line and bottom line EBITDA growth to the prior year in Q3, all while continuing to generate consistent free cash flow that we've used to improve our net leverage to levels not seen since late 2022 just following our spin. Our ability to deliver growth and profitability for the third straight quarter in what remains a challenging operating environment highlights the consistency in our operational execution and flexibility in our model. Even as payer disruptions created headwinds early in the quarter, our teams navigated the challenges effectively, ensuring that we built momentum throughout the quarter to deliver growth and position us well as we enter Q4 to finish the year strong. Before reviewing consolidated and segment detailed performance, a few Q3 highlights that demonstrate clear execution on our strategy include the following: Returning the business to consistent growth in 2025 was a strategic priority, and we are well on our way. With Q3 results, we have now delivered several quarters of year-over-year growth in both revenues and adjusted EBITDA. Improving the financial health of the business has been a focus in 2025 as well. With a return to consistent adjusted EBITDA growth, we have used the improved adjusted free cash flow to reduce our net debt to adjusted EBITDA leverage amount to 3.9x in Q3 2025, lower by over 1.5 turns compared to Q4 2023 when leverage was 5.4x. The improved leverage lowers our Q3 2025 annualized cash interest expense by approximately $19 million compared to Q4 2023. Improving the financial health of the business provides us with improved liquidity and an overall balance sheet flexibility for innovation and potential M&A. Hospice segment momentum continues to be very strong,…

Thanks, Ryan. As you're aware, the CMS 2026 home health final rule has not yet been published. We remain focused on our strategies to mitigate as much of the pricing headwind as possible in 2026 and are well on our way with the various strategies we have already deployed. More details will be forthcoming when we report full year 2025 earnings and 2026 guidance during Q1 of next year. As we noted in our comment letter, the proposed cuts, if finalized, will worsen the existing trend of reduced patient access to home health care. Home health is the patient preferred and most cost-effective post-acute care option and thus saves Medicare money. We urge CMS to reverse the temporary and permanent adjustments contained in the proposed rule to ensure adequate access to home health is restored. Operator, we can now open the line for questions.

[Operator Instructions] And your first question comes from the line of Brian Tanquilut of Jefferies.

This is Meghan Holtz on for Brian Tanquilut. It's nice to hear some -- you guys had some additional payer negotiations that came out favorable for you guys. So can you kind of provide some color on the rate increase you received from that new one in November and then the pipeline of any additional payer innovation contracts that you have upcoming for renewal?

Sure. So as I mentioned, this was our first payer innovation contract, national one that came up for renewal. So we were pleased with the update. Because it's already a payer innovation, we really won't disclose the update that we received. But I will say that we continue to work with those that we had negotiated. More of the regional type agreements will be coming up in the next year. The future national agreements, it will be more towards the end of next year, early 2027 before the additional national agreements will come up.

Okay. And then just a quick follow-up. You guys had nice improvement in the G&A line. Can you provide some color where that expense reduction is coming from? And then how much more runway do you have to reduce and remove some costs in that line?

Thanks, Meghan. Yes, so as we think about G&A, when we think about home office, more traditional back-office capabilities in the context of both internal and external related expenses. So a combination of some headcount reductions as well as some efficiencies that we're able to really in-source capabilities from third-party vendors while not impacting any of our capability. When you think about in the quarter, roughly $1 million to $1.5 million of that overall kind of G&A improvement sequentially, we think is durable and kind of how we think about things prospectively going forward.

And your next question comes from the line of Ryan Langston of TD Cowen.

This is Christian Borgmeyer on for Ryan Langston. Last year, we saw a pretty big jump in hospice average length of stay sequentially from 3Q to 4Q. Should we expect a similar tailwind sequentially this year just as a product of seasonality? I'm just curious what seasonal factors drive that as we get to the end of the year.

Yes, it's difficult because, obviously, last year, when you look, we're going to have some pretty big comps here both in Q3 and Q4. And so as you mentioned, there usually is some seasonality. It's why we've added some additional resources to make sure we can extend the outreach that we have. I would say that the holiday times tend to be a little bumpy within this segment. You do have folks that tend to want to wait to elect until after the holiday. So it's -- I would say it tends to be one of our more unpredictable times of year, especially as we go into the 2 upcoming holidays.

Got it. And then just one quick one on the payer innovation contract renegotiation. How long is re-contracting cycle typically? Is it annually? Or is it more contract by contract?

Yes. It's by contract by contract. I would say the majority of our contracts are 3 year. We do have some that are 2 years, but I would say the majority tend to be around a 3-year time frame.

[Operator Instructions] And we have a follow-up question from Brian Tanquilut of Jefferies.

As long as there's no other queues, I'll ask another follow-up. Can you guys just kind of speak to labor in the quarter, specifically if you guys continue to benefit from some of the peers that you saw changing pay structure and you're able to capture some labor there? And then how are you thinking about wage inflation in '26, if you could give some preliminary color there?

Sure. So I would say we've seen a nice uptick continued in our applicant pool for nursing and for therapy. And so that has been nice to see. We've continued to see an uptick also in our headcount on the clinical capacity for Home Health and for Hospice. So are pleased with the results that we're seeing there. And then as it relates to wage, I would say, we're kind of, I would say, back to that normal merit around that 3% is what we're experiencing. There are markets that will pop up occasionally that are more challenging. We do handle those more at a market level. I would say we're seeing a little bit more of that right now in the therapy side of things, but we monitor that at a market level.

And there are no further questions. I will now turn the conference back over to Bob Okunski for closing remarks.

Thank you, everyone, for joining today's call. Please feel free to reach out if you have any additional questions. Thank you for your time.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.